Properly completing a foreclosure sale requires the fulfillment of many technical requirements. To minimize the risks of a successful legal challenge by a debtor, the Bank should pay close attention to detail in performing the various steps involved in a nonjudicial foreclosure. The following is a shorthand list of the steps which are typically required to conduct a nonjudicial foreclosure:
Request a Foreclosure Certificate from a title company showing the status of title to the real estate.
Obtain an environmental assessment of the real estate to be foreclosed upon.
Review the foreclosure procedures and requirements in the note, deed of trust, and other loan documents very carefully and review the file to determine whether the Bank has partially released any of the property from the deed of trust lien.
Determine whether there are superior or subordinate lienholders, and decide how, when and whether to communicate with them.
Determine whether the trustee named in the deed of trust is available to act for the Bank and, if not, appoint a substitute trustee.
Deliver a default notice, and any other required notice to the debtor and all other parties obligated to pay the debt evidenced by the note.
Provide notice of sale to the Internal Revenue Service (“IRS”) or the Pension Benefit Guaranty Corporation (“PBGC”) as appropriate, if any tax liens or employer liability liens affect the property.
Review the property description in the deed of trust (or related security agreement) to determine whether there is any personal property on which to foreclose and, absent countervailing considerations, be sure that all real and personal property described in the deed of trust is included in the notice of trustee’s sale and ultimately foreclosed.
Post notice of foreclosure with respect to the property at the county courthouse (and any other locations required by law or the terms of the deed of trust) at least twenty-one days prior to the intended foreclosure sale date, file a copy with the county clerk, and deliver written notice of posting to all parties obligated to pay the debt evidenced by the note (and possibly also to the current owner, any junior lienholders, or any other party known to have an interest in the property).
Execute appropriate affidavits of the sending of notice and the posting and filing of same.
Obtain an appraisal of the real estate to be foreclosed.
Review the various factors involved in determining a bid price for the property, including appraised fair market value and tax considerations.
Prepare trustee’s deed and affidavits concerning the sale.
Conduct the foreclosure sale.
Complete and file the trustee’s deed and affidavits concerning the sale with the county clerk of the county in which the property is located.
Make appropriate related disclosures.